Huge Moral Damages Award

Wal-Mart Canada has been hit with the largest award for moral damages in a Canadian employment case ever. In December, the Ontario Superior Court awarded punitive and moral damages of $750,000 to former Wal-Mart Canada employee Gail Galea. Read the full decision here (nearly 100 pages).

Ms. Galea was a senior management employee, hired by Wal-Mart in 2002. She quickly climbed the ranks, eventually earning nearly $500,000 in annual total compensation and the position of Vice-President, General Merchandise.

Pre-Termination Conduct

In January 2010 Wal-Mart restructured. Ms. Galea was removed from her position and told that she was “still valued,” but that that they “did not know what to do with her.” Ms. Galea remained employed by Wal-Mart, but largely without a role, for the next ten months. She was put in the position of taking temporary assignments, and of trying to find herself a new position within the company. With respect to the restructuring, the court found that the then-president and CEO of Wal-Mart Canada had removed Ms. Galea from her position with the hopes that she would resign. Regarding Wal-Mart’s conduct during this time Justice Emery stated:

Wal-Mart would make representations to Ms. Galea about her career prospects while making decisions that detracted from, or even defeated that purpose. It is not that Wal-Mart set Ms. Galea up to fail; it is that Wal-Mart built her up, only to let her down that much more. That corporate behaviour was not just unduly insensitive, it was mean.

He found that Wal-Mart knew Ms. Galea’s career with Wal-Mart was over in January 2010, and effectively strung her along for another 10 months. In November 2010 Ms. Galea was terminated, without cause.

Moral Damages

In making the moral damages award Justice Emery considered Wal-Mart’s conduct before and after the termination, as well as their conduct during litigation. The court awarded Ms. Galea damages for Wal-Mart’s conduct during the 10 month period during which Ms. Galea remained employed, but was effectively without a job. Holding that Wal-Mart had breached the employer’s implied duty of good faith, and that this breach had caused Ms. Galea mental distress.

The court determined that Ms. Galea was not required to provide expert medical evidence with respect to her claim for mental distress, holding that in the employment context, that the law in Ontario does not require that a plaintiff lead medical evidence to make out a case for this type of damages.

Wal-Mart’s litigation, and post termination, conduct was such that the court awarded $50,000 against them. As part of her employment Ms. Galea had signed a two year non-compete agreement, a term of which was that Wal-Mart continue to pay her her base salary during that time, if she was terminated without cause. Among its post-termination wrongs, Wal-Mart stopped paying Ms. Galea after 11.5 months. Wal-Mart also was found to have delayed litigation, causing “mental distress” and “prolonged anguish” to Ms. Galea.

In total Ms. Galea was awarded $250,000 in moral damages ($200,000 for Wal-Mart’s conduct during the 10 months and $50,000 for post termination conduct), including aggravated damages and damages for mental distress and $500,000 in punitive damages.

Takeaways

This is not the first time Wal-Mart Canada has been slapped with a large moral damages award. In Boucher they were successful on appeal of reducing a $1,000,000 punitive damages award to $100,000. We will have to wait to see if Wal-Mart will choose to appeal this case.

This case represents a trend of courts holding employers liable for bad behaviour towards employees. While the dollar amounts in this case are high, it should be kept in mind that one purpose of punitive damages is to deter the reprehensible behaviour. The bigger the company the bigger the award needs to be for it to have meaning.

If you are about to enter into a contentious termination in your workforce, contact us at SpringLaw to help you navigate what could otherwise be an expensive and high risk situation.